Economists Peacock in Europe
Amid wild booms and busts, the stock market can seem impossible to tame. Perhaps it is, but that won’t stop Jerome Powell, Chair of the Fed, from trying. It’s his job to keep the economy afloat for investors, many of whom have bet their bottom dollar on something he just said!
Central banks bear the weight of the world on their shoulders, tasked with keeping markets on the straight and narrow using only a limited toolbox of tricks. In the US, it’s Jerome Powell who chairs the Fed. The President of the European Central Bank is Mario Draghi. Armed mainly with control over interest rates, these two have a lot on their plates right now!
As investors leave home shores to diversify their portfolios around the world, they’re confronted with conflicts, collapses, and concerns. Markets are getting by, but some fear the dominos have already started falling in Europe. Italian debt has failed, and the continent’s economic powerhouse of Germany has lost its way amid uncertainty in the European Union. Everything is not okay! So, what better time for Jerome Powell to fly to Switzerland, and show off how wonderful a job he’s doing in the States.
Flanked by European economists in Zurich, Jerry Interest Rates himself told markets not to fear a US recession. He sympathized with slowing growth in Europe and admitted trade war concerns were stunting investment, but it was a positive public broadcast overall. Investors liked the tone, and loved Powell’s favorite punchline as he said he would “act as appropriate to sustain the expansion.” To many, that means dropping interest rates this month. That means a boost to stocks is on the way, but things are never that simple!
